Expense Management Strategies — Part Three
More Tips for Managing Monthly and Recurring Expenses
In Part Two, we talked about more ways that shops can save with expense management strategies. This week, we’re looking at some of the final pieces of managing expenses, from things as small as office supplies to costs as big as travel and parts. If you’re looking for a way to save on business expenses, keep reading!
More Expense Management Strategies
Office and Other Supplies:
While often smaller charges, the cost of office supplies can often add up fast. One way to minimize those costs is to purchase these supplies online instead of from local stores. Not only will you find lower prices, but you’ll be able to purchase items in advance, especially if you find them on sale. This also extended to forms for your business! Instead of spending time creating them yourself or buying them at your local office supply store, you can download, customize, and print lots of free forms online.
The only caveat is if you have discount or bulk stores (like Costco) near you. These stores often have cleaning supplies, tools, stationary, etc. at a better price than you can find online. Take some time to price out your most commonly bought office supplies to see what will save your shop the most in the long run!
Travel and Entertainment:
Review your travel and entertainment policy. Institute one if there is none. Lodging costs can be reduced by using less expensive chains. Have you negotiated corporate rates? Are AAA or AARP rates lower than the corporate rates? Set per diem limits on meals, reduce or eliminate cash advances, and tighten receipt requirements. Require detailed receipts of lodging expenses, not simply the credit card receipt. Disallow room service, minibar charges, and other non-business-related charges which otherwise may be hidden on a credit card receipt.
Rising fuel costs place an undue burden on your company’s bottom line. But there are some commonsense changes you can make that can help buffer the impact on your business. For instance, you may want to review your shuttle service policy. Give some thought to combining trips to accommodate more than one customer (post-COVID, of course.) Would it be more cost effective to pay for Uber rides home for your customers, instead of keeping a shuttle and an employee to drive said shuttle? Another viable practice is to encourage — or even require — employees share rides to conferences, training, and other events when the company is footing the bill.
Another area to focus your expense management efforts on is operational efficiency by streamlining processes within the organization. Managing your parts inventory is included in this and critical to your business. Having too much or not enough inventory — or even the wrong inventory — can significantly impact technician production. Your parts inventory should be consistently tweaked to enable top technician performance. We have been encouraging our clients to work with both their parts suppliers as well as their software vendor toward maintaining an optimal inventory.
We have also encouraged our clients to maintain higher levels of inventory where feasible, since the cost of delivery or pickup is continuously rising. Having the correct part readily available has a significant effect on technician efficiency and relates directly to achieving billable hours objectives.
As part of your expense management strategy, you should align yourself with a competent management coach. Our observations indicate that the most significant expense in a repair shop today is the loss of revenue that stems from inefficient workflows. A good management team can determine areas in need of improvement and provide you with suggestions to improve those workflows and increase operational efficiencies. There are always areas that can be improved in a business, and these are often spotted easiest by consultants or coaches from the outside.
You Can Do It!
Implementing an expense management strategy can help you remain profitable by identifying all the costs associated with doing business, then striving to keep them under control and within budget. By clearly identifying these costs, you can impact expense management by measuring that only approved expenses are incurred, that proper records of expenses are kept, and that everything is within budget.
In addition, by taking a more active role in expense management, you can implement policies to make sure one-time and high-price expenditures receive required approvals as well as that your own payments are made in a timely manner. By keeping expenses within realistic boundaries, expense management can ensure continuous profitability for your company.
In the three articles of our expense management strategy series, we’ve presented a few ideas on how to save money by managing your business expenses. Try to create and implement an expense management strategy that is an ongoing process to help you stretch your money, especially during tough times. Place your emphasis on building a strong financial base, rather than on spending money on things your business doesn’t need.
Start cutting expenses today toward a goal of building at least a year’s worth of financial reserve for your tomorrows. It can be done! If you have questions or need help identifying the areas your shop could save money, give our office a call at 425-988-6812. RLO Training offers management training, service advisor courses, performance groups, and more to help shop owners see the success they’ve been dreaming of.